Funding public projects: A Case for the Nash product rule
Florian Brandl (University of Bonn), Felix Brandt (Technische Universität München), Matthias Greger (Technische Universität München), Dominik Peters (University of Toronto), Christian Stricker (Technische Universität München) and Warut Suksompong (National University of Singapore)
GPI Working Paper No. 14-2021, published in Journal of Mathematical Economics
We study a mechanism design problem where a community of agents wishes to fund public projects via voluntary monetary contributions by the community members. This serves as a model for public expenditure without an exogenously available budget, such as participatory budgeting or voluntary tax programs, as well as donor coordination when interpreting charities as public projects and donations as contributions. Our aim is to identify a mutually beneficial distribution of the individual contributions. In the preference aggregation problem that we study, agents report linear utility functions over projects together with the amount of their contributions, and the mechanism determines a socially optimal distribution of the money. We identify a specific mechanism—the Nash product rule—which picks the distribution that maximizes the product of the agents’ utilities. This rule is Pareto efficient, and we prove that it satisfies attractive incentive properties: it spends each agent’s contribution only on projects the agent finds acceptable, and agents are strongly incentivized to participate.
Other working papers
Moral uncertainty and public justification – Jacob Barrett (Global Priorities Institute, University of Oxford) and Andreas T Schmidt (University of Groningen)
Moral uncertainty and disagreement pervade our lives. Yet we still need to make decisions and act, both in individual and political contexts. So, what should we do? The moral uncertainty approach provides a theory of what individuals morally ought to do when they are uncertain about morality…
Aggregating Small Risks of Serious Harms – Tomi Francis (Global Priorities Institute, University of Oxford)
According to Partial Aggregation, a serious harm can be outweighed by a large number of somewhat less serious harms, but can outweigh any number of trivial harms. In this paper, I address the question of how we should extend Partial Aggregation to cases of risk, and especially to cases involving small risks of serious harms. I argue that, contrary to the most popular versions of the ex ante and ex post views, we should sometimes prevent a small risk that a large number of people will suffer serious harms rather than prevent…
Prediction: The long and the short of it – Antony Millner (University of California, Santa Barbara) and Daniel Heyen (ETH Zurich)
Commentators often lament forecasters’ inability to provide precise predictions of the long-run behaviour of complex economic and physical systems. Yet their concerns often conflate the presence of substantial long-run uncertainty with the need for long-run predictability; short-run predictions can partially substitute for long-run predictions if decision-makers can adjust their activities over time. …